By Shuli Ren

REUTERS

It is now tempting to jump into TIPs - Thailand, Indonesia and the Philippines – now that the Fed postponed its decision to taper for three more months.

They are the hardest hit after all and bouncing back most strongly. So we’ve got value and momentum there? For instance, the Jakarta Stock Exchange Composite Index rose 4.7% today; the Indonesian rupiah gained 4.2%. Both will contribute to a big jump for iShares MSCI Indonesia ETF (EIDO) today, which already gained 2.4% yesterday. Even so, this ETF is down 24% from its May peak.

Similar story goes for Thailand and the Philippines: the iShares MSCI Thailand ETF (THD) is down 16.6% from its peak; the iShares MSCI Philippines ETF (EPHE) is down 20% from May.

Not so fast, says Credit Suisse, which believes the rest of the year will behave like the second half of 2010 and 2012. Back then, it was not the TIPs, but Korea, MSCI China and the cyclicals in Asia that led the rally. If history is any guidance, the broker believes we can see a 20% gain by year-end. Here are the analysts Sakthi Siva and Kin Nang Chik:

We have been suggesting the potential for a 20% rally in 2H 2013 as we believed 2H 2013 looked similar to 2H 2010 and 2H 2012 with the bottoming in global IP.

While we are surprised that the Fed did not taper at all during its September FOMC meeting, we believe the absence of taper makes the comparison with 2H 2010 and 2H 2012 even stronger.

Apart from history, another factor which could support our call for a 2H rally is 2013E consensus EPS downgrades coming to an end. While September is still associated with downgrades of 0.5%, these are smaller than the 1.3% and 1.5% downgrades seen in July and August, respectively.

This sounds counter-intuitive. The iShares MSCI China ETF (MCHI) is only 4% below its one-year peak. The iShares MSCI South Korea ETF (EWY) is at par with its peak right now.

But there are economic arguments for it. North Asia is more export-oriented and can take advantage of a global economic recovery, as I argued in a column two weeks ago.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. Barrons.com’s Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.